According to Charles Nortje, the CEO of Credit Guarantee, even before our recent tumble to ‘junk’ status, South Africa had already experienced several years of slow economic growth. As a result, many businesses are carrying a lot of debt.

As a small business owner or entrepreneur, the economic situation may have left you wary of taking on new business. The challenges you face in today’s economy are numerous, and you may be asking yourself:

• If I take on that new project, will the client pay the invoice?
• If my client does not pay that invoice, how will my business pay staff for the work done?
• Can I extend more credit to my client? What about the risk?
• What if I do not take on the new project out of fear of non-payment, will this not be a loss to my SME anyway?

While all businesses have felt the impact of tough times, it’s especially important for you as a small or medium business owner, to identify the challenges and risks you face in order to come up with solutions before it’s too late.

We identified the following important challenges small businesses in South Africa face:

1. Limited access to funds
2. Uncertainty of economic conditions
3. A lack of human resources
4. Difficulty planning for the future
5. Lack of the right skillset

1. Limited access to funds

Securing financing for growth is often one of the biggest challenges for businesses. South African banks generally tend to take a conservative approach which makes it difficult for small businesses and entrepreneurs to secure loans and credit facilities. Learn more about the factors that influence credit applications.

2. Uncertainty of economic conditions

Economic and political conditions are uncertain and can create an anxious working environment. While individual business owners don’t really have a hand in the political sphere, there is one thing that can be done to ease the stress: remove the economic and political risks with trade credit insurance. For example, our international trade credit insurance covers your business against non-payment by your export customers situated outside of South Africa. Learn more about the insurance services we can offer your business.

3. A lack of human resources

While we all sometimes tend to think we can do it all on our own, time and time again it’s been proven that we need each other. Putting together the right team in uncertain economic climates with job uncertainties is a big challenge for small businesses and entrepreneurs. While skilled professionals can be costly to keep on your team it’s important to remember that talented individuals also look for flexibility in their work, room to grow and challenges where they can an impact. When you create a culture of inclusiveness, kindness and compassion in your business, you will attract the right team.

4. Difficulty planning for the future

It can be difficult for small and medium enterprises to plan too far into the future, since the uncertainty around financing and human resources can be overwhelming. However, by planning for the worst, you can prepare and safeguard your business’s future by taking out insurance like trade credit insurance. If you sell our goods or services on credit to your customers, having your debtors book covered will help you better sleep at night knowing you will avoid the risk of non-payment. In turn, this step of planning for the future will open you up for more creative problem solving since your entrepreneurial stress is already less.

5. Lack of the right skillset

While it has always been (and always will be) important for entrepreneurs and business owners have a good grasp of financial skills and business management, studies show that it’s also very important for SMEs to have good understanding of marketing and the digital sphere moving forward. Industries and markets are evolving and with that comes the responsibility to ensure the person leading the company s informed and can identify digital opportunities when it arrives.

Mitigate Your Risk, Maximise Your Growth

You want to grow your small business, but you want to do so at minimal financial risk. You want to take on new and ambitious projects, but you don’t want to endanger your current operations. The last thing you need is to be forced to retrench staff or, even worse, close up shop because clients could not pay their debts.

These concerns are valid and are being experienced by businesses across the country. However, there is a way, a solution that allows you to take on business growth without the risk.

Remember, as more companies try to make fewer Rands stretch further, your small business becomes more vulnerable to its buyers defaulting on mismanaged debts. When you may already be working in narrow margins, the non-payment of a debt can be crippling, and is a hit that few SMEs can afford to take. The question is, then how do you take on the growth that you know a business needs to survive, without sinking it in tumultuous economic waters?

At the risk of overextending the metaphor, your business needs a lifeline, a guarantee that the risks you take on are shared and mitigated, and that non-payments will not scuttle your entrepreneurial venture. Simply put, your business needs trade credit insurance – the insurance of your debtors.

Insure your debtors against the inability or unwillingness to meet their contractual obligations, and your business will be covered against the loss of their payment default, mitigating the sting you’ll feel in your bottom line.

The crux of the matter is that business success is often built on confidence: confidence in your organisation and its liquidity; confidence in your partners and their reliability – ultimately, it can depend on your confidence in your ability to take on risks and survive them. Trade credit insurance gives you that confidence.

Contact us today to find out more about the services we offer small South African businesses, including domestic and international trade credit insurance, and TAKE ON new challenges, new growth, and new business with confidence!

Editor’s note: This post was originally published in April 2017 and has been updated for accuracy and comprehensiveness.